Ecommerce has been around for a while, but it has never been as popular as it is currently. Now, at least 30% of the total retail transactions in the UK happen courtesy of ecommerce platforms. 

What makes it even better is the ecommerce industry is constantly evolving thanks to daily improvements in the technology backing it. Hence, it’s a desirable sector with huge propensities for steady growth. And, of course, these are what angel investors often look for in businesses.

The market is ripe and full of opportunities for startup enterprises. But, it’s left to you to prepare and position your business for the angel investors. 

Our latest read explores what you need to know about angel investors and how to prepare for them.

Who are Angel Investors?

Angel Investors are wealthy individuals who provide financial backing for startups and growth-stage businesses in exchange for equity or royalties. Angels can be industry experts or ordinary rich people looking to put their money to work.

However, most angel investors are entrepreneurs who amassed their wealth doing business. So, they understand how the industry works and are often conversant with trends in the market. 

Angel investors may or may not be accredited. Accreditation is the government’s official recognition of individuals with high incomes or net worths. The accreditation process legally confers the status of investors on said individuals. 

But accreditation is only a formality; it does not affect a person’s ability to invest. So, unaccredited investors are not breaking any laws or operating illegally.

Lastly, angel investors can be anyone — they can be your friends, family or total strangers willing to partner with your business. Again, the main distinguishing feature is they’ll provide the funds out of their private wealth pool.

Why Angel Investing?

As an ecommerce business owner, you have multiple options you can go for when seeking external financing. For example, you can choose debt financing, which provides financial aid without necessitating you to sacrifice part ownership of the business. So, it’s understandable that you may not see the reason to prepare for or partner with angel investors in the UK.

The reasons you should consider angel investing are numerous. But, here we’ll look at it from the investor’s perspective; why an angel investor will want to partner with your ecommerce business. 

Firstly, angel investors like to invest in companies they can grow with. So, they tend to graft towards businesses in the early growth stage within 1-3 years. 

Additionally, the ecommerce industry is a lucrative one with plenty of opportunities. Such ventures that promise significant returns are the types angel investors like to partner with.

It’s also worth noting that within the last decade, approximately 39K investors have backed two or more startups in the UK. While that may seem relatively small considering the period, we should also consider it relative to the total number of angel investors in the UK.

In that sense, it’s impressive and encouraging for startups. But again, investors don’t go around giving money to anyone who asks nicely. They want to be sure their investments will bring returns. 

Hence you must prepare accordingly for the angel investors and convince them that investing with you is a profitable bet.

How To Find Angel Investors

You can either go out to find angel investors or prepare your business for them to locate you. Both ways are excellent; the goal is to ensure the investors learn about your business and partner with you. 

Here are a few pointers to help you find the right angel investor.

Use Search Engines and Social Media Platforms

The world revolves around the internet at this stage; you can find almost anything online with a simple google search. So you can use it to identify potential investors. Fortunately, several angel investors in the UK make their profiles public online. 

All you need to do is type something as simple as “Ecommerce Angel Investors in the UK” on Google, and you’ll have a ready list within seconds. 

Alternatively, you can also find angel investors via social media; but how you’ll do that is a little different from a google search.

Twitter and LinkedIn are the two most popular social media platforms you’re likely to find potential investors. That’s because these two social platforms often attract major players in the business world. 

Fortunately, finding ecommerce investors in the UK isn’t as challenging as people often portray it to be. UK investors are usually open to ideas and business prospects. That explains why the UK business investment ratio is one of the highest in Europe. 

Participate in Pitch Competitions

Participating in pitching competitions holds several advantages for business owners looking for external funding. The most apparent benefit is you have a chance to win it and secure direct financing. 

The other opportunity is it gives you direct access to angel investors. So even if you didn’t win the competition, you could still meet an investor who may find your business prospects attractive. 

Additionally, it lets you get familiar with the potential investors in your industry. During the pitching, you get exposure to several angel investors, which gives you a headstart in creating a shortlist of the ones you’ll like to do business with. 

Lastly, it gives you practical experience on how to prepare a pitch for angel investors. So, when you eventually face the investors, you’ll have more confidence and be better equipped to nail your presentation.

Position Your Ecommerce Business to Attract Investors

Again, you don’t always have to run around for angel investment; sometimes, you only need to prepare your ecommerce business appropriately. Essentially, it would be best if you made your business attractive to investors.

But of course, angel investors are often meticulous when screening the businesses they want to partner with. Hence, it can be quite a challenge to impress them. Plus, you’ll probably have to compete with other ecommerce business owners for their attention. 

Hence, you must play the game better. The easiest way to get one over your competition is to identify and leverage what angel investors look for in businesses. Below are some of the things investors like to see in companies.

A Well-structured Management Team

Most investors are more particular about the team behind a startup than the business idea. And yes, it’s a prudent strategy. No matter how brilliant an idea is, it can only go as far as the visioners can push it. 

Hence, an excellent way to catch an investor’s eye is to build an exciting and well-structured team. Investors love to see that crucial aspects of a business are in capable hands. It gives the impression your startup is focused and has the foundation for tremendous growth.

But, of course, building a well-structured team is no cakewalk. It involves finding skilled personnel to handle critical areas of the business. Essentially, you must assemble individuals you can believe in and convince the investor to believe in.

Convincing Market Opportunity

Most angel investors are looking for incremental gains. Hence they’re more interested in businesses with the propensity to scale and serve more extensive markets. 

So, you must address that aspect of your business as you prepare to reach out to the angel investors. Primarily, you want to convince the investors your business has the potential to become significant.

To achieve that, you must first be in a market that has potential; then, you must make the investors see that potential. Admittedly, you’ll do more of this as you prepare to pitch your business to angel investors. But even before you get the opportunity to pitch, prepare and position your business to show investors it’ll grow.

Founders With Skin in the Game

Angel investors love to see founders with brilliant ideas and a passion for driving them. They love to see energetic business owners who are passionate about the enterprise. 

Most importantly, they want to see that the venture is not just a quick cash-grab for you.

Only individuals who are highly obsessive and passionate about their businesses can pull through in difficult times. You need a lot of emotional investment in your startup to go through the storms and stick with the ship.

Investors will be willing to journey with you if they’re convinced you won’t jump ship when the storms come. So, genuine commitment will work in your favour when trying to get angel investment for your business.

The Potential Risks to the Business

Again, investors are objective people who consider a business’s critical aspects before deciding what to do. You may be the most passionate founder, have the best team, and have excellent prospects. But, if you have no clear plans for mitigating your business risks, that’s a vulnerability that can scare investors away.

Angel investors feel more assured when you’ve identified and tied all loose ends to your business. That involves determining all the potential risks to your venture and putting measures in place to mitigate them.

When trying to ascertain the riskiness of a venture, investors will typically consider a few things:

• The business’s monthly burn rate
• The principal, technological and regulatory risks to the business
• The steps you are taking to mitigate the identified risks.

So, an integral part of preparing for an angel investor involves considering these things and working on them. Startups that can prove they have eliminated, or reduced risks will have an edge when pitching to angel investors in the UK.

Speaking of pitching, several startups need to learn how best to present their businesses when looking to get angel investments. 

So, let’s look at some tips to enable you prepare a pitch for angel investors in the UK.

How To Prepare For and Pitch to Angel Investors

This section is all about getting the right balance in your pitch. We’ll also examine what to include and how to deliver it masterfully to the investors.

Create Your Proposal and Deck

Most investors would like to peruse a formal proposal before deciding to do anything with you. Besides, every standard fundraising procedure involves proposal creation and deck presentation. So, angels will also expect you to apply this process to your business.

That said, you should include all critical information in your proposal to the angel investor. Primarily, you want the proposal to contain the following.

• An executive summary
• A market feasibility report
• A status quo report
• Your financial projections
• Identified business risks and measures to mitigate them
• Your current team strength

All standard templates for pitching to angel investors contain these fundamental elements. The purpose is to ensure the proposal is sufficient to bring the investor up to speed about your business and plans. 

After that, you should prepare a pitch deck containing your content for soliciting funding from the angel investor. Your pitch deck can also double as your slide deck if you can make it concise enough. So, you’ll use it as your presentation guide when pitching your business to angel investors.

Prepare and Personalise Your Pitch For the Angel Investor

Each angel investor has a different personality, so they all have specific criteria, agendas and beliefs about ecommerce businesses. And of course, these differences will show in how they perceive your business.

As a result, you need to consider the investor’s personality and factor it into your pitch preparation. Essentially, you must prepare your ecommerce business presentation differently for each angel investor. 

Below is a checklist you should consider when trying to personalise your pitch.

• Who are you pitching to?
• What’s their personality like?
• What are you hoping to get from them?
• What’s their investment portfolio like?

You must do the necessary due diligence on your target investor. Your results from proper research help identify the best way to prepare a personalised pitch for each angel investor on your shortlist.

Rehearse Your Presentation

Many people underrate the effectiveness of pre-pitch rehearsals. But, it’s a crucial part of your preparation you must pay attention to. Ensure you practice your speech before going to pitch to investors.

Preparation not only helps structure your pitch efficiently but also gives you ample opportunity to identify and fix possible mistakes in your presentation. Additionally, you’ll be able to maximise your time and prepare for possible questions.

The best part is rehearsals will boost your confidence ahead of your meeting with the investors. So, find time to practice your speech.

Start Strong and With Passion

The energy you bring into a presentation can influence how investors receive your pitch. Hence, your best bet is to start authoritatively and let your passion flow through your speech.

Remember, investors may be industry experts, but they don’t know more about your business than you do. So, show them your knowledge with confidence from the get-go.

However, don’t give the investor a false persona when trying to sound authoritative. Most times, your character will show through your presentation. But people often mistake masking up anxiety for confidence. 

Investors often can tell when you’re bluffing, so don’t try to sell it to them. Instead, it would be best if you built up your confidence during preparation before the presentation.

Be Clear about the “Why” of the Business

Pitching to angel investors is you telling them why they should invest in your business. The easiest route is to tell them why the company exists in the first place.

It doesn’t matter why you started the business; tell it. Tell the investors if you opened because you think ecommerce is booming and you can make a lot of profit. Tell the investors if you started the venture because you saw a market gap and wanted to fill it.

Telling your reasons helps you achieve a couple of things. The first is that it helps to identify the right investors to partner with. 

Remember that you’re not only getting funding from angel investors, but you’re also becoming co-owners. And it’s best to partner with someone who understands your purpose for the business.

The second thing is it gives you clarity on your goals. By telling your reasons, you become more objective about it, and the inputs from the investors can help you understand what you need to do better.

Lastly, telling the investors your purpose will help them decide if they want to invest in your business. If they find your cause appealing, they’ll be more willing to partner with you. If they don’t, you may as well move on to the next investor.

Make the Business Opportunity Obvious

The best way to sell your business to an angel investor is to make their chances at a profit apparent. Most angel investors are primarily interested in how they’ll get higher investment returns. And the easiest way to show them that is by revealing the market opportunities.

So here, you want to articulate the commercial opportunities you intend to leverage for profitability. That will include talking about the consumers, market trends, your competitive advantage and how you intend to maximise all of this for higher returns.

The bigger the opportunity is, the likelier the investor will love it. But of course, that’s still subject to the other factors in this section.

Use Data and Figures To Your Advantage

Investors like to quantify market insights in data. So an excellent way to get their attention in a presentation is to use relevant data to bolster your points. Essentially, this should be information that’ll encourage them to do business with you. 

You should also use more figures and images (charts and graphs) to illustrate your data. That way, you can summarise the information into bite-size nuggets for the investors. Regardless of how you’ll like to buttress your data, conciseness is key to keeping the investor’s attention.

Other Crucial Tips for Preparing Ecommerce Business for Angel Investment

We’ve examined the core ideas that’ll enable you prepare adequately for angel investors. However, there are a few other things people often pay less attention to, but they can have a tremendous effect on your relationship with angel investors.

Understand the Potential Terms of the Partnership

After you may have pitched and secured the investor’s interest in your venture; you’ll formalise the relationship with a contract agreement. This contract will include all the conditions and terms guiding your partnership with the investor.

Most times, the angel investor will have their lawyers draw up the terms and serve them to you. Then you’ll peruse it with your lawyers and determine if you agree with the terms stated therein. Signing the contract signifies you accept the conditions in the document and commit to its requirements.

However, the contract review process becomes tedious as you meticulously pore over the document’s details. But you can avoid that by becoming familiar with the potential partnership terms before approaching investors.

Plan Your Exit

Most investors aren’t looking to be lifetime owners when they invest in a business. They’ll often look to profit from their investment for a while and sell the company after reaching a particular growth level. 

If you’re looking to keep your business for life, you may find yourself in a conflict with an angel investor who intends to put the business up for sale down the line.

So, you should factor in your exit plan while preparing for angel investors. Determine if you want to stick with the business for life or if you’ll sell it later on. 

If you intend to sell, you should have a plan for when you want to exit the market. And more importantly, work with an angel investor whose buy-and-hold strategy or buy-and-sell timeline matches your goals.

In the End

There’s no direct way to prepare for angel investors. It would be best if you considered several factors and put in measures to improve your chances of getting investment financing.

You’ll have better chances of securing investments by targeting investors who are in your location and want to invest in your space. Additionally, you should refine and personalise your pitch deck for each individual you’re pitching to.

Lastly, ensure you adequately prepare for your pitch presentation, get your data right and show the investor you’re giving them an ample opportunity for profit. You should consider using a template for pitching to the angel investors if it’s your first time.

Or you can go with Axis Shift. We’re constantly looking to partner with struggling ecommerce businesses — intending to turn them into profit powerhouses. Call us to learn more about a possible investment partnership.